Time to get real about renewables, says IEA

International Energy Agency says the main impediments to renewables are opposition from major existing players, inertia in traditional energy systems and wrong perceptions about the cost of wind and solar. Didn’t we already know that?

“When the urgency for change is so clear and the potential benefits of renewable energy are so large, why doesn’t the transition occur at the necessary pace and scale?”

It’s a question that many people ask of themselves and each other, and struggle to find an answer. The energy efficiency sector has been pondering this question for years, and concluded that most companies are just too damn lazy to act.

Now, the International Energy Agency has asked itself this question, and used the response to launch a new initiative to hasten the take-up of renewables, and remove the barriers that have so far impeded its deployment.

The IEA on Tuesday formally launched a new program dubbed as ACTION, containing the policy initiatives to ensure that renewables are deployed at the rate required, which the IEA believes is very rapidly, considering that its “carbon budget” will not allow for new fossil fuel development beyond 2017 unless dramatic action is taken soon to reduce emissions, or at least conserve energy use through efficiency measures.

Most of the ACTION program is pretty mundane – but one section on the barriers and challenges facing renewables is revealing – particularly coming from a conservative body such as the IEA, which was created in the 1970s to defend the western world’s access to oil, coal and gas, but has since evolved as a champion for low carbon energy development.

The first problem is about the perception of costs. The perception remains that renewable energy is more expensive than fossil fuels, an impression anyone can gather by reading mainstream news media or listening to the radio, or the ingrained rhetoric of Anglo-Saxon Conservatives in particular.

But, says the IEA, this perception is wrong, as even Australia’s own Bureau of Resources Economics and Energy has conceded. Some renewable energy technologies are already cost-competitive with fossil fuels, the IEA says, and many others would currently be so if existing subsidies for fossil fuels were eliminated, and external costs of energy production and use (including climate change, other environmental and health impacts) were included in the price.

And, the IEA points out, the high up-front costs that are associated with most renewable energy technologies are offset by lower operating costs and reduced price risk for producers and consumers. The sooner massive deployment occurs, the more (cost-) efficient the transition will be.

Perception about costs is one thing – real barriers is another altogether.

The IEA says most of the barriers and challenges are linked to the fact that modern renewable energy technologies are still developing compared to today’s more mature fossil and nuclear energy technologies, and to the fact that current regulations and infrastructure were established to support the existing energy system.

“Renewables also face opposition from entrenched and vested interests, which take advantage of their significant market power and political influence to safeguard their positions,” it notes, addressing the “regulatory capture” that has been identified by Professors Ross Garnaut in Australia and by others elsewhere. “Policy makers must find ways to avoid further lock-in to existing infrastructure and technologies, and to overcome the natural inertia against change.”

Of course, none of this is particularly new. Such statements are common in the renewable sector, and a regular refrain among many independent analysts, environmentalists, and the Greens – and are largely dismissed by much mainstream media as the slightly balmy ravings of the green lobby. It is rare, but instructive, that such conclusions are drawn by conservative organisations such as the IEA.

The IEA notes, however, – as so many polls have revealed – that the public generally has a positive attitude to renewables – something that has accelerated since the oil price volatility intensified by the “Arab Spring”, the Fukushima nuclear disaster in Japan, major oil spills and other environmental disasters, which the IEA says “have further highlighted the costs and risks of the current energy system, adding new drivers for renewable energy.”

On the other hand, shale gas discoveries in the United States and elsewhere have reduced natural gas prices and postponed the perceived urgency of developing fossil fuel alternatives. “Recent developments have changed the scene, sometimes – but not always – in a direction that is favorable to renewable energy.” This includes the international economic crisis, which has reduced the amount of financing available for renewable energy from traditional sources.

In a conclusion that has particular relevance for Australia – particularly given the massive push back against the renewable energy target (having more renewables than expected is now branded as a costly and pointless exercise by the vested interests and their cheerleaders in the Conservatives and Labor right) – the IEA says governments need to deliver significantly stronger policies to support renewable and improve efficiency, combined with aggressive targets and timetables, and a rapid shift away from direct and indirect support for fossil fuels.

It says policy makers need to adjust existing policies and create innovative new ones to take advantage of possible new financing sources —including pension funds, sovereign wealth funds, insurance funds, private investors, cooperatives, wealthy companies that want to expand into in “green” options, and even recent inventions like “crowd funding”. “Now that obligations or bonds are less secure than they once were, such investors are looking for alternative ways to securely invest their money, and renewable energy offers such an option. “

Those policies include rebatesand other investment incentives, feed-in-tariffs and obligatory renewable shares, clear and simple permitting procedures, low-interest loans, and revolving public funds. “A combination of policies is generally required, and the needs will differ from one region or country to another. The overarching factors for success include stability, predictability and clarity for stakeholders,“ it says.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

6 Comments

D. John Hunwick 6 years ago

If I were to consujlt any number of books that I have acquired over the last 10 years or so, most would be saying (quite correctly for the time of publication) that renewable energy is more costly than coal etc. I have yet to see a book (in the style of Clive Hamilton) written with a publishing date of 2012 or 2013 that blasts the recent ideas about renewables as no longer applicable. Having exerpts like those on this site scattered all over the internet but not collected into one comprehensive volume including a section of Australian policies (ie the changes needed) and our politicians (specifically named)does not give a foundation on which to engage in public discussion. A series of books by different authors homing in all this, and quoting the IEA and the latest IPCC, Hansen, etc would take the initiative of past efforts away and make them look out of date (which they are).

Note that the ACTION star is an initiative of an Implementing Agreement under the IEA, not the IEA itself. In this case 9 countries that want to accelerate the deployment of renewable energy, for instance by learning from best practices in policies.

adam 6 years ago

Hi David, can you expand on what you mean by Implementing Agreement? And how this qualifies how the Action report should be interpreted?

Much appreciated.

Cheers, Adam.

Scott 6 years ago

The promoters of “sustainable and renewable” energy have wonderful fantasies, but sadly, they have no hard science and facts to back up their fantasies. These same promoters commonly demonize fossil fuel and nuclear energy companies as being greedy and blocking fantastic ideas for renewable energy. But this again is a lie. If a company is truly greedy, then it just wants profits regardless of business. So if these renewable energy ideas were so such great, then “greedy” companies and individuals would be delivering them in a heartbeat.

The renewable promoters wish to direct attention elsewhere to hide the greed and abuse within their ranks. They do not talk about and expose those companies and individuals who hide in the shadows while taking subsidies from those who work for a living and pay taxes. Be honest about defining what truly greedy behaviour. Greed does not apply to a company who openly and transparently conducts business for profit where the customers have a right to use or not use. However, greed does apply to those companies and individuals who hide behind the scenes, undermine others for their self promotion, and then take money which they did not earn.

Nothing is stopping large scale “sustainable renewable” energy projects except the cold hard facts that they do not yet exist. Multiple worldwide studies show “renewable’ energy projects are at a cost of 6 to 8 times that of fossil fuels and nuclear energy projects. At that cost, these “renewable” energy projects are far from being sustainable as economies, jobs, lifestyles, and countries would collapse under financial burden.

I am fully supportive of having true “sustainable renewable” energy projects, and wish to continue to fund research. But funding stops at research. Subsidizing a non-viable project does not make if viable, it just passes on the costs in a masked way.

I challenge any and all energy producing projects to operate and be evaluated on a fair and consistent basis. Some simple conditions are described below:

1. Receive no subsidies in equipment purchase, construction, operation, abandonments, rehabilitation, and direct additional infrastructure. Subsidies do not make a viable or sustainable project. This should not be confused with funding for or subsidizing research.

2. Measure and report full global and project lifecycle environmental impacts. Sustainable must be measured in global terms, not just in “my back yard”. For some some of the new technologies, this means full disclosure on the environmental impact of the full lifecycle to mine rare precious metals and other materials, to manufacture and build the projects, to take useable land out of service and then to rehabilitate, and rebuild and remanufacture when these project end their useful life. Some projects such as solar may have rather short lives. While the promoters say the sun may continues to shine, the project that captures the energy has come to the end of its useful life.

3. Mine, manufacture, build, and rehabilitate the energy project with equivalent form and cost of energy. A sustainable project does not allow cheap energy to build and run it.

4. Provide energy for transportation. Civilization requires energy forms that are mobile and effective for various forms of transportation.

5. Compensate Landholders who are financially impacted by an amount of no less than twice their incremental revenue that they lose. The metric is revenue, not profit. Landowners need appropriate compensation beyond their personal profits so that they can share and pass-on benefits appropriately to their employees, contractors, vendors, communities, etc.

6. Pay at least 10% royalty to State Government for indirect public benefits such as schools, hospitals, and major roads. The local area should receive a major share of these benefits such that it becomes a better place during the project and after the project.

7. At the end of the economic life of a project, restore all disturbed lands to at least 95% of their productive capacity before the project. When a project leaves an area, its goal should be a lasting legacy that is positive on the land and community that it leaves behind.

8. Provide energy at no greater than the twice the cost of fossil or nuclear fuels when the first 7 conditions are fully honoured. As all climate predictions are failing miserably to support and provide definitive evidence of human induced global warming, I think a doubling of energy cost is the maximum limit that the world’s population may consider acceptable. Communicate lifecycle costs versus lifecycle environmental impact, and let the consumer decide their choice of energy, not have a Government imposed solution that will not be accepted. Do this in an appropriately regulated energy project in a market in which the consumer makes a choice, and accepts the consequences of that choice.

These are just a few simple conditions for an energy project to honour. Come on “sustainable renewable” energy projects, let’s see your projects and investors. The world wants them and no one is in your way.

Giles Parkinson 6 years ago

Scott, I’ve published your comment to illustrate the sort of nonsense that is spread around the internet – renewables 6-8 times the cost of nuclear? Really? Perhaps you would care to mention a single coal-fired generator that has met your eight conditions for renewable energy. Perhaps you should read on new solar projects being installed in Chile without any subsidies – something the fossil fuel industry as a whole has failed to achieve after more than 100 years.

Anthony Graves 6 years ago

The need for urgent action to combat climate change was an accepted fact within the scientific community when I was at University in the late 1980s, the fact that its implementation has progressed at a snails pace since that time is hugely disappointing but not very surprising.

Consider the technological revolutions and changes in society that have happened in the interim. In 1990, we did not have mobile phones, laptop were rare, home computers in their infancy, no internet, etc etc. All of these things have had a quantum effect on how we live and work, and yet renewable energy which was also in its infancy at the same time has progressed in a kind of plodding step by step route to where it is today. Hardly a revolution!

Firstly we need a shift in the perception of the problem. Climate change is not a problem for planet earth, nor for the ‘environment’ but it is a problem for humans. Stop measuring ice bergs, filming polar bears, counting species of butterfly, these things are important, but they will never have any impact on getting a majority of humans to adapt their lifestyle and consumption. Humans will generally take action either if they are threatened in an actual local in your face kind of way, or if the change is linked to benefit, an improvement in life. We are heading rapidly towards the first of these, whilst we do nothing to change the second. In short prophets of doom will never be a catalyst for change, it has to be for positive reasons, and for real change to occur you have to have people with you.

In addition to this fundamental change in attitude, there are economic and policy changes that can help provide a framework for change to occur at a much faster rate. In the UK Renewable energy is over subsidised at the developer / landowner level, and yet it is over priced at the consumer level, the electricity needs to be cheaper than fossil fuel energy otherwise it will remain a luxury purchase, and not an option for the majority of people. The change in subsidy levels for all forms of generation needs a complete overhaul. The developers and landowners need to get a fraction of what they currently receive for two reasons, firstly so that the money given to them can achieve much more value for money to the tax payer, and secondly so that the developers and planners have to engage with the communities that host the developments. We need a system of incentive that gets communities and not just landowners queuing up to develop Renewable energy projects, and not fighting against them.

There are examples of good practice all over the world, but as Gandhi said, “When the people lead, the leaders will follow”. At present the people are not leading.